Have car insurance premiums gone up?

Over the past year, many goods and services have become more expensive – and car insurance premiums are no exception. We explain the factors behind this rise and how you can look for a cheaper deal.

While inflation has subsided, the prices of various goods and services remain high. According to findings published by the Office for National Statistics (ONS), the price of a large chocolate bar rose by 9% in the 12 months to March.

To put this into perspective, if it cost £1 last March, it now costs £1.09.

But what about intangibles – like car insurance? Are these services also on the rise?

In this article we explore:

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Has car insurance gone up?

According to the Association of British Insurers (ABI), the trade body, the average premium for comprehensive car insurance has risen by a third compared to last year.

In the first three months of 2024, the average car insurance policy cost £635. Although this is an increase of just one percentage point on the previous quarter, it represents an increase of £157 on the same period last year.

Another survey by Consumer Intelligence, which collects its data from comparison sites and direct providers, found that in November, people were most likely to quote premiums between £500 and £749. On average, prices have almost doubled since 2013.

“Motorists of all ages have seen a surge in new business offers over the past year,” said Max Thompson, Insurance Insight Manager at Consumer Intelligence.

Why are car insurance premiums rising?

Quotezone founder Greg Wilson noted that part of the reason for the increase in the cost of car insurance is due to the increase in the cost of raw materials, repairs and even paint.

The ABI backed up this claim in a report last year, finding that repair costs have risen by a third since the start of 2023. Meanwhile, replacement parts costs for popular cars have risen between 12% and 21% in that time.

Insurance providers take these rising costs into account when setting their premiums.

In addition, Wilson cited adverse weather conditions as a reason for the higher volume of claims. More claims – and therefore payouts – ultimately mean that insurers have to factor this risk into their premiums.

Rodney Bonnard, UK head of insurance at Ernst & Young, a professional services firm, said insurers enjoyed profitability during the pandemic when motor use was low. But that turned around in 2022 when claims began to grow and inflation rose.

The average cost of car insurance in the UK over the years

According to the ABI, car insurance premiums have been rising steadily until the Covid-19 pandemic. After the quarantine restrictions were introduced, car insurance premiums fell as did the number of road accidents.

However, in the last two years when inflation has also increased motor vehicle insurance premiums.

Why is car insurance so expensive for young drivers?

“Ultimately, insurance prices revolve around risk. The higher the predicted risk, the more expensive the policy,” said Omaid Qaiser, an expert at Cuvva, a temporary car insurance provider.

Part of his job is pricing for the company, and while he said he takes a number of factors into account, driver age plays a significant role in his quotes.

“Statistical evidence shows that younger drivers under the age of 25 are more likely to be involved in an accident because they have had less practice behind the wheel,” he began.

“Furthermore, the severity of accidents tends to be higher, which means they often face the highest premiums,” Qaiser said.

However, he said there are tangible ways younger drivers could lower their premiums. This includes buying a vehicle in a low insurance group, sharing the vehicle with their family, or getting a more experienced driver on their policy.

Our guide outlines other measures that younger drivers can consider.

Best car insurance deals

Times Money Mentor has teamed up with Quotezone to help our readers find the best car insurance deals on the market. Click below to start your journey and see how much you can save by switching providers.

car key insurance comparison

With Quotezone you only need to fill in your details once and they will send your details to over 100 insurance providers in the UK. Moments later, their quotes come back to you in real time, on your screen. Don’t waste time filling out multiple forms and compare all the best offers in one browser.

When filling in your information, make sure it is as accurate as possible. Remember, false information can invalidate your claim and leave you unprotected.